Sunday, January 15, 2006

The BBC reports that Kim Jong-Il, the leader of North Korea has been touring Southern China, with it's booming towns and hi-tech firms, particularly in Shenzhen. They pick up on footage from Japan's Kyodo news agency, noting, "The footage broadcast by Japanese television shows a man with Mr Kim's dark glasses and bouffant hair leaving a hotel in Shenzhen."

North Korea is probably one of the world's only autarkies(αὐτάρκεια), doing next to no trade with the outside world, and running a near-self contained economic ecosystem. North Korea terms this economic model Juche or self-reliance. The principles are close to Marxism and Stalinism, but Kim claims it is new and was defined by Kim Il-sung, his father. Kim Jong-il is the ultimate interpreter of Juche, and his words on the Juche idea are final.

The idea has not worked very well, given the state of North Korea's faltering economy. It lost much ground following the fall of the East European communist regimes, and the disintegration of the Soviet Union, all key trading partners of North Korea. Trade with South Korea has expanded in the last few years, although there is more black-market trade than official between the two countries. Apart from a few links with China, North Korea is almost entirely isolated. There are chronic food shortages and a heavy reliance on local agriculture. North Korea went through a modernization program in the 1970s, but was unable to service it's debt, defaulting on most loans in the 1980s. The national debt stood at approx $12 billion in 2000. North Korea's GDP using Purchasing Power Parity was approx $23 billion in 2003, and had a real growth rate of 1%. This translates to about $1300 per capita GDP. Total exports were only about $1 billion and imports around $2 billion. Compare this to South Korea's numbers - a per capita GNP of $22,000 in 2005, a growth rate of between 4% and 5%, actual GDP of ~$1 trillion, exports of $200 billion and imports around $180 billion.

For Kim to take an interest in China's economic boom is a good sign. China is investing about $200 million in the North Korean economy and a glasnost-style remodeling of North Korea is the only non-militaristic or anarchistic way out for the benighted country. Mr Kim could do little better than to emulate the Chinese model, and may be indicating via the itinerary of this trip that he is ready to introduce reforms.

On the militaristic front, things are not so good. Autarky tends to translate to paranoia, as evidenced all through history. North Korea has very close militaristic ties with Pakistan and China. The Pakistani Ghauri missile is a rebadged North Korean Nodong, much like we buy Taiwanese rebadged hard drives. North Korean observers were reportedly present at the Pakistani atomic tests. North Korea may be emboldened by Iran's nuclear ambitions, although non-proliferation is as close to a walking dead horse as any international policy is likely to be.